In a close vote, the Senate has passed a comprehensive Republican budget bill, clearing the way for significant changes to how renewable energy projects are taxed and incentivized. The bill, approved by a 51-50 margin with Vice President JD Vance casting the decisive vote, seeks to dismantle components of the 2022 climate law implemented during former President Joe Biden’s term. With the proposed excise tax on solar and wind projects removed at the last minute, focus now shifts to the approaching elimination of incentives for renewable energy.
The bill, which now proceeds to the House for further consideration, witnessed bipartisan resistance due to the initial proposal for the excise tax. Although the controversial tax was ultimately discarded, the bill itself largely adheres to the terms made public late last Friday, except it speeds up the expiration of tax credits for clean energy. Proponents of renewable energy, along with environmental groups, foresee potential hurdles for the growth of the solar and wind industry, raising concerns that utility costs may surge as a result of the measure.
Abigail Ross Hopper, leader of the Solar Energy Industries Association, expressed alarm over the bill’s potential repercussions, stating that if enacted, the legislation would escalate energy costs, shutter factories, and weaken the electric grid. Meanwhile, the American Petroleum Institute praised the legislation, viewing it as a positive step towards “energy dominance” through expanded opportunities for oil and gas development. Republicans argue that the bill would engender savings for taxpayers by bolstering traditional energy resources and ensuring grid reliability.
Despite the division on the measure, a compromise was reached allowing for wind and solar projects that initiate construction within a year from the legislation’s enactment to maintain full tax credits. However, these projects must be operational by the end of 2027 to qualify for the credits. Other energy technologies like advanced nuclear, geothermal, and hydropower will continue receiving incentives until 2032.
Alaska Senator Lisa Murkowski called the deliberations challenging, but noted that the compromise, especially the removal of the excise tax, would benefit numerous projects in Alaska, a state she champions as needing energy independence. Senator Sheldon Whitehouse from Rhode Island sharply criticized the bill, describing it as a broadly damaging measure that would prioritize corporate interests over public welfare and burden future generations with heavy debt.
In addition to impacting renewable energy, the GOP bill revokes electric vehicle tax credits and suppresses a methane emissions fee. Emphasizing the reversal of what he termed the “green new scam” of the Biden administration, Senator John Barrasso lauded the bill’s efforts to support oil and gas leasing and reinstate coal leasing in various states. West Virginia Senator Shelley Moore Capito echoed these sentiments, indicating the Senate’s alignment with President Trump’s energy objectives.
Environmental advocates and proponents of clean energy have voiced their disappointment, stressing that the bill undercuts the progress established by prior climate law and hinders the country’s move towards an energy-efficient future. Nathaniel Keohane from the Center for Climate and Energy Solutions expressed dismay, highlighting that diminishing incentives for wind and solar power generation could lead to higher energy costs and challenge the stability of the national grid.